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New 'Transformers' film should give Michael Bay a big payday

The director is forgoing an upfront fee in exchange for a bigger cut of the profits from all revenue sources, not just ticket sales.

June 10, 2009|Claudia Eller and Ben Fritz

The opening of "Transformers: Revenge of the Fallen" is still two weeks away but Hollywood executives are already speculating that it could be the biggest movie of the summer. It could also yield one of the richest paydays ever for a director.

Michael Bay agreed to forgo his normal upfront directing fee and cut of ticket sales in exchange for a bigger piece of total profits from all revenue sources once the studio, Paramount Pictures, recoups its costs. This kind of deal is increasingly common in Hollywood as studios attempt to avoid situations where they lose money on a film or eke out a tiny profit while big-name talent walks away with tens of millions of dollars, as happened with Paramount's "Mission: Impossible III" and its star Tom Cruise.

Bay, who is also an executive producer on the movie, cut a similar deal on the first "Transformers" in 2007 and walked off with about $75 million after the sci-fi film grossed $708 million worldwide and became one of the year's top DVD sellers.

He is among a handful of Hollywood directors and producers, including Steven Spielberg, Peter Jackson and Jerry Bruckheimer, who are paid top dollar for the movies they make. His credits include such hits as "Armageddon," "The Rock," "Pearl Harbor" and the "Bad Boys" films, as well as 2005's costly miss "The Island."

Though Bay won't start earning his share as quickly because "Revenge of the Fallen" cost more than the original, he could ultimately make even more of a killing.

Several executives who have seen the latest audience tracking surveys for "Revenge of the Fallen," which debuts June 24, are predicting a five-day domestic opening exceeding $160 million. That would beat "Spider-Man 2," which hauled in $152 million in 2004 to become the record holder for a five-day opening by a film debuting on a Wednesday.

With a familiar brand that dates to the '80s line of alien robot toys that can turn into cars, trucks and airplanes; hot young stars Shia LaBeouf and Megan Fox; and over-the-top special effects, "Transformers: Revenge of the Fallen" is drawing interest from nearly all moviegoers. It appears to be particularly popular with young people, the ones who go to theaters most often.

The film is opening simultaneously in nearly all major foreign territories. If it follows the pattern of the first film, it will earn even more money internationally than in the U.S. and Canada.

The original "Transformers" earned 55% of its box-office revenue overseas.

Tracking is never a surefire indicator of a film's performance, of course. But it's rare when a movie is the No. 1 most anticipated offering three weeks from its opening -- which "Transformers" was last week.

The picture has a good shot at being the summer's top-grossing worldwide hit. Warner Bros.' July 15 release of "Harry Potter and the Half-Blood Prince" is the only other likely competitor for the crown.

That will likely mean very healthy profits for Paramount, which laid out just under $200 million to produce the sequel and is investing between $150 million and $175 million to market and distribute it globally. The studio paid $155 million to produce the original "Transformers."

Beyond Bay, no other talent is participating in the movie's profit pool. LaBeouf earned a flat fee of around $5 million. He received about $500,000 on the first movie.

DreamWorks principal Steven Spielberg, who worked closely with Bay on both "Transformers" movies, gets no money for his services. That's because when Paramount bought DreamWorks in 2006, he agreed to be compensated only for movies he directed, but not the ones he produced, under his company's banner.

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claudia.eller@latimes.com

ben.fritz@latimes.com

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